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1
Tsaurai, Kunofiwa. "An analysis of the sufficiency of credit risk management framework in the banking sector in Zimbabwe." Corporate Ownership and Control 10, no. 1 (2012): 515–20. http://dx.doi.org/10.22495/cocv10i1c5art3.
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The research investigates sufficiency of credit risk management policies of banks in Zimbabwe from 2000 to 2007 using the E-Views statistical software package. The regression model suggests that high non performing loans were due to inefficient management of the banks’ credit risk activities. An inverse relationship between non performing loans and credit risk management competency was also detected. The t-statistic for size of the bank was found to be closer to 1.5 and that shows the size of the bank has a bearing on both the level of non performing loans and the sufficiency of credit risk management frameworks. The author therefore recommends enough credit risk management frameworks be instituted in Zimbabwe banking sector to ensure financial sector stability.
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Dzomira, Shewangu. "Electronic fraud (cyber fraud) risk in the banking industry Zimbabwe." Risk Governance and Control: Financial Markets and Institutions 4, no. 2 (2014): 17–27. http://dx.doi.org/10.22495/rgcv4i2art2.
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The paper explores forms of electronic fraud which are being perpetrated in the banking industry and the challenges being faced in an attempt to combat the risk. The paper is based on a descriptive study which studied the cyber fraud phenomenon using content analysis. To obtain the data questionnaires and interviews were administered to the selected informants from 22 banks. Convenience and judgemental sampling techniques were used. It was found out that most of the cited types of electronic fraud are perpetrated across the banking industry. Challenges like lack of resources (detection tools and technologies), inadequate cyber-crime laws and lack of knowledge through education and awareness were noted. It is recommended that the issue of cyber security should be addressed involving all the stakeholders so that technological systems are safeguarded from cyber-attacks.
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Bara, Alex, and Pierre LeRoux. "Technology, Financial Innovations and Bank Behavior in a Low Income Country." Journal of Economics and Behavioral Studies 10, no. 4(J) (September 14, 2018): 221–34. http://dx.doi.org/10.22610/jebs.v10i4(j).2423.
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Technology has enabled banks to introduce new products that integrate markets, simplify operations and enable expansion of business at low cost, expand to new markets, take new risks and deepen their markets. Zimbabwe registered significant growth in adoption and diffusion of financial innovations over the past two decades, which coincided with a shift in the structure of credit portfolios of banks, and growth in credit as well as risk appetite. This study empirically evaluates the impact of financial innovations in influencing bank behaviour, specifically, portfolio structure risk appetite and delivery channels of banks in Zimbabwe. The study applied co-relational analysis, Fully Modified OLS and the Dynamic OLS estimation models as well as Autoregressive Granger causality approaches. Empirical results show that technology has the capacity to influence activities of banks in risk management, credit and delivery of banking service in lowincome countries. Precisely, financial innovation influences increase in credit towards previously high-risk areas, compositions of credit portfolios in banks and support growth in number of bank accounts. Causality was found to run from financial innovation to bank behaviour, and only in the long run.
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Dzomira, Shewangu. "Digital forensic technologies as e-fraud risk mitigation tools in the banking industry: Evidence from Zimbabwe." Risk Governance and Control: Financial Markets and Institutions 4, no. 2 (2014): 116–24. http://dx.doi.org/10.22495/rgcv4i2c1art4.
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The paper investigates digital analytical tools and technologies used in electronic fraud prevention and detection, used in the banking industry. The paper is based on a descriptive study which studied digital forensics and cyber fraud phenomenon using content analysis. To obtain the data questionnaires and interviews were administered to the selected informants from 22 banks. Convenience and judgemental sampling techniques were used. It was found out that fraud detection and prevention tools and technologies would be most effective way of combating e-fraud if they can be utilized. It is concluded that banking institutions should reshape their anti-fraud strategies to be effective by considering fraud detection efforts using advanced analytics and related tools, software and application to get more efficient oversight.
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Dzomira, Shewangu. "Analysis of bank failures during financial tumult in Africa-Zimbabwe: A historical review." Journal of Governance and Regulation 3, no. 3 (2014): 75–80. http://dx.doi.org/10.22495/jgr_v3_i3_c1_p1.
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The paper describes the analysis of the bank failures phenomenon in Africa with a deep analysis of Zimbabwe scenario. The paper is based on historical research design which used analytical and comparative research approaches to study the bank failures phenomenon. To obtain the historical evidence the researcher consulted primary sources, secondary sources and running records. It was discovered and concluded that the failing of banks was attributed to liquidity and solvency problems as a result of flawed corporate governance standards, inadequate risk management, high levels of non-performing loans and speculative activities among a confluence of factors. It was therefore recommended that enterprise-wide risk management framework should be implemented without failing and adoption of Basel II/III on banking supervision and surveillance.
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Magzumova, N. V., and V. D. Fedotov. "RISK MANAGEMENT IN COMMERCIAL BANKS." Scientific bulletin of the Southern Institute of Management, no. 3 (October 7, 2018): 68–73. http://dx.doi.org/10.31775/2305-3100-2018-3-68-73.
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The current stage in the development of the banking structure is characterized by serious changes in organizational structures, the introduction of innovations and the use of progressive management methods. In the conditions of market relations, the probability of risks in banking activity increases. Risk is an activity connected with overcoming uncertainty in a situation of unavoidable choice, in the process of which it is possible to quantitatively and qualitatively assess the probability of achieving the expected result, failure and deviation from the goal. Banking activity is characterized by an increased risk. The decisions that are made in the investment process are almost always accompanied by risks. In this regard, it is necessary to develop a decision-making mechanism that will manage various risk factors. Risk management plays an important role in the commercial activity of the bank and attaches great importance to the effective functioning of the risk management system. The policy of a commercial bank for the management of claims is aimed at monitoring, analyzing, coordinating and managing claims, in which case an assessment of the magnitude of the risk and establishing compliance with acceptable limits is necessary. In order to take into account the volatile situation in the banking services market, activities in the management of commercial property claims must be constantly reviewed and adjusted.
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Dzomira, Shewangu. "Plastic Money and Electronic Banking Services Espousal vis-a-viz Financial Identity Theft Fraud Risk Awareness in a Developing Country." Journal of Economics and Behavioral Studies 9, no. 5 (October 21, 2017): 255–64. http://dx.doi.org/10.22610/jebs.v9i5.1928.
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Exploitation of plastic money coupled with electronic banking services has come as expediency to financial establishment customers in Zimbabwe. This paper sought to analyze plastic money and electronic banking services espousal vis-a-viz financial identity theft fraud risk awareness in Zimbabwe banking sector via banks’ websites. The theoretical underpinning for this study is Routine Activity Theory. The study used qualitative content analysis research technique for examination of the text content data through the consistent taxonomy process of coding and classifying themes or patterns to submit a painstaking considerate of financial identity theft fraud awareness by the banking sector in Zimbabwe. A sample size of 14 banks (including commercial, merchant and building societies) was used and the banks were arbitrarily chosen on the basis of website accessibility and ease of use of the data. The study findings suggest that there is very little financial identity theft awareness in Zimbabwe by the banking sector through their websites to the general public whilst there is amplified adoption of plastic money and electronic banking adoption. This study proposes a need to amplify the information and inform plastic card and electronic banking customers of the types of financial identity theft fraud. Plastic card and electronic banking is an urgent area to focus on for banking institutions and should inexorably capitalize in it. Financial identity theft information should be easily retrievable and conveyed in a manner that makes reasonableness to the varied customers.
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Sahiti, Arbana, Arben Sahiti, and Muhamet Aliu. "Enterprise Risk Management in Kosovo’s Banking Sector." Baltic Journal of Real Estate Economics and Construction Management 5, no. 1 (November 27, 2017): 38–50. http://dx.doi.org/10.1515/bjreecm-2017-0004.
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Abstract Today risk management plays a vital role in business. Each firm, whether big or small, makes an effort to manage risk more effectively. Risk management is very important in the financial system, especially in banks. Billions of Euros are spent each year on the financial reporting of banks. Banks should implement effective solutions in risk management to mitigate their risks. Great financial debate that originated in the 1990s is reportedly linked to errors that occurred in the banking sector due to poor risk management. It should be noted that today technology plays a key role in risk management and it has already had a positive effect on the financial industry. Analysis of risk and its management has become significant in the Kosovo economy since the post-war period. The nature of the banking business is threatened by risks because more financial products are becoming complicated. The main role of banks is intermediation between those who have resources and those seeking them. Banks face various risks at the corporate level, such as operational, liquidity, legal, credit, and market risks; thus, these risks should be converted into a composite measure. This research aims to determine practices and effects of risk management in the banking sector. Relevant data were collected from banks through questionnaires and telephone interviews; analysis has been conducted using statistical tools. This study will engage both the quantitative and qualitative methods of data analysis. Dependent variables will be separated from independent variables, and regression analysis will be used to analyse the quantitative data.
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Dimov, S., and V. Smirnov. "Risk Management in Dual Banking Systems: Islamic Ethical and Conventional Banking." Review of Business and Economics Studies 7, no. 4 (February 10, 2020): 6–12. http://dx.doi.org/10.26794/2308-944x-2019-7-4-6-12.
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The author makes comments on the state of the problem in part of the English-speaking scientific thought. The authors present a comparative analysis of risk management conducted in countries where the dual banking system is practised — Islamic (ethical) banking and conventional (western) banking. The study showed that a risk profile of an Islamic bank is not significantly different from the one of the conventional banks in practices. In the beginning, they point out the central thesis and prospects for the development of conventional and Islamic banking. The central part of the comments begins with the historical aspect of the comparison. According to him, despite the differences, they are based on the priority of financial and human values. Further, the authors carefully discuss the risk profile of Islamic banks and the unique risks facing Islamic banks. It was confronted with conventional risk management of banks based on the Basel Committee on Banking Supervision (BCBS). Today, the regulation applies to credit risk, market risk, operational risk and liquidity risk (Basel II and Basel III). After all, the author reaches two essential conclusions for his research.
10
Tchernykh, S. "Risk Management in Banks." Voprosy Ekonomiki, no. 8 (August 20, 2004): 120–27. http://dx.doi.org/10.32609/0042-8736-2004-8-120-127.
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Problems of managing risks of partnership in banks taking into account the new Central Bank of Russia document "On Organization of Internal Control in Credit Organizations and Bank Groups" are considered in the article. It is pointed out that effective bank risk management including risks of partnership сan be realized only under condition of bona fide competition. Functioning of banks in competitive environment is impossible without risks, their monitoring allows to become competitive on the banking services market if various "black lists" and other unsound negative information leading to lowering the level of liquidity of a credit organization are absent. Methods of managing risks of partnership that become all the more complex under the influence of technological innovations (in particular, the development of operations with credit derivatives) are also analyzed.
11
Liem, Christina. "Enterprise Risk Management In Banking Industry." Firm Journal of Management Studies 3, no. 1 (April 25, 2018): 1. http://dx.doi.org/10.33021/firm.v3i1.381.
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<p>Enterprise Risk Management (ERM) in banking industry is a rare topic in academic research, even though ERM implementation becomes new regulation from the banking regulators since year 2014. The purpose of this study is to examine ERM implementation during the early stage of the ERM implementation regulation in Indonesian, especially its impact towards bank performance and vice versa. This study focuses on all 4 (four) state-owned commercial banks in Indonesia though a descriptive explanatory study and data panel GLS simple regression by STATA MP-64. This study employs ERM Index (Gordon et al, 2009) as a proxy of ERM implementation; and bank performance is presented by 3 (three) proxies: NIM, ROAA, and EM. The findings show that 75% of state-owned commercial banks have positive ERM Index, and also, they have the different maturity stage of ERM implementation. Moreover, this study identifies that ERM Index has positive significant impact towards ROAA and vice versa; ERM Index has positive but insignificant impact towards NIM and vice versa; and ERM index has positive but insignificant impact towards EM. As a conclusion, this study proposes to all commercial banks in Indonesia should implement ERM seriously implement because it has been proven that ERM implementation delivers positive impact towards bank profitability and it transmits a positive signal to shareholders.</p>
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Islam, K. M. Anwarul, and Orobah Ali Barghouthi. "Risk Management of Islamic Banking: An Islamic Perspective." International Journal of Islamic Banking and Finance Research 1, no. 1 (November 30, 2017): 25–28. http://dx.doi.org/10.46281/ijibfr.v1i1.35.
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The financial services industry of Islam consists of an increasingly vast number of institutions, such as investment and commercial banks, investment companies and mutual insurance companies. In Islamic banks effective risk management deserves special attention. However, it has numerous drawbacks that are required to be understood better. Risk management is about the attitude towards paying off and the strategies in dealing with them and the risks associated with it in relation to modern banking. As an operational problem, risk management is about the classification and identification of methods, processes and risks in banks to supervise, monitor and measure them.In comparison to conventional banks, Islamic banks face big difficulties in identifying and managing risks due to bigger complexities emerging from the profit loss sharing concept and nature of particular risks of Islamic financing. This research investigates in detail the need for risk management in Islamic bank (Ilias, S. E. B. 2012).
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Nugraha, Dodi Eka. "Reputation Risk Management in Islamic Banking in Indonesia." EKSISBANK: Ekonomi Syariah dan Bisnis Perbankan 3, no. 2 (December 29, 2019): 100–107. http://dx.doi.org/10.37726/ee.v3i2.13.
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Inherent risk is the risk inherent in the business activities of islamic banks, both of which can dikuantiflkasikan or not, which could potentially affect the financial position of the bank risk management, particularly reputational risk for the islamic banks, either individually or for banks in consolidation with the subsidiaries most involved the active supervision of the board of commissioners, directors, and DPS, policies, procedures, and limits, and the process of identification, measurement, monitoring, and control of the risk and SIM risk. The risk of this arising, mostly because of the media coverage and rumors about the banks that are negative as well as the communication strategy of the bank are less effective. The negative publicity against one of the islamic banks would contaminate the reputation of the bank the islamic other, although islamic banks other not to engage in responsible action. How to control reputation risk is best with the anticipation/preventive action and maintenance program reputation. Reputation risk is a risk which is abstract and shaped the intangible asset for the company. The handling of reputation risk should be preventive because of the cost of the completion of this risk is large and as a result can damage and kill the company
14
Makanyeza, Charles. "Determinants of consumers’ intention to adopt mobile banking services in Zimbabwe." International Journal of Bank Marketing 35, no. 6 (September 4, 2017): 997–1017. http://dx.doi.org/10.1108/ijbm-07-2016-0099.
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Purpose The purpose of this paper is to investigate the determinants of consumers’ intention to adopt mobile banking services in Zimbabwe. Design/methodology/approach A survey of 232 bank customers was conducted in Chinhoyi, Zimbabwe, using a structured questionnaire with Likert-type questions. Customers were randomly intercepted as they walked out of five major banks. Structural equation modelling, independent-samples t-test and one-way ANOVA were used to test research hypotheses. Findings The study found that perceived usefulness, perceived self-efficacy, social influence, relative advantage and perceived compatibility all have a positive effect, whilst perceived risk has a negative effect on behavioural intention to adopt mobile banking services in Zimbabwe. Perceived ease of use, facilitating conditions, perceived complexity, perceived trialability, awareness-knowledge and demographic factors (gender, age, education and income) did not significantly influence behavioural intention to adopt mobile banking. Perceived ease of use was found to positively influence perceived usefulness, while perceived self-efficacy was found to have a positive effect on perceived ease of use. Behavioural intention was found to positively influence usage of mobile banking services in Zimbabwe. Research limitations/implications Data were collected from bank customers in Chinhoyi, one of the emerging towns in Zimbabwe. Future research should be expanded to include other major cities in Zimbabwe and other countries. More similar studies should be conducted to test the factors identified in literature in different contexts and markets and on other innovations. Practical implications The study advises banks to pay particular attention to perceived usefulness, perceived self-efficacy, social influence, relative advantage, perceived compatibility and perceived risk when designing new mobile banking services. Originality/value There is not a unified position regarding factors influencing mobile banking adoption. Factors vary with contexts, markets, time and types of innovations. The study tested some major factors identified in literature in the context of Zimbabwe.
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Rudhani, Leonora Haliti, and Driton Balaj. "Management of Liquidity Risk and the Banking Activity." International Journal of Finance & Banking Studies (2147-4486) 8, no. 2 (July 20, 2019): 01–08. http://dx.doi.org/10.20525/ijfbs.v8i2.299.
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The banking sector in Kosovo continues to have a high level of sustainability and financial stability. Two substantial components for the stability of the banking system appear to be liquidity and liquidity risk. The purpose of this paper is to analyze liquidity management in Kosovo's commercial banks through liquidity risk indicators from 2008 to 2017. By comparing the methodology of the data presented, the study will assess the state of management of the liquidity risk of commercial banks. From 2008 until now, commercial banks in Kosovo have had liquidity reserves at a level higher than the level required by CBK, which means that exposure to liquidity risk was minimal.
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Easa, Nasser Fathi. "Knowledge Management at Banking Industry." International Journal of Customer Relationship Marketing and Management 10, no. 2 (April 2019): 21–34. http://dx.doi.org/10.4018/ijcrmm.2019040102.
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The present research reviews the literature had been done on knowledge management (KM) in the banking industry in different countries and provides further guidelines to ensure successful implementation of KM in banks. The findings indicated that the application of KM in banks started at the World Bank in 1996 and was followed by banks in several developed countries then spread out to different places in developing counties. The majority of banks in Western developed countries such as the UK and USA, Canada and Germany, are both human- and technology-oriented in terms of managing knowledge. The majority of KM studies in developing counties were exploratory using quantitative data to investigate to what extent these banks were aware of the importance of KM and how they practiced KM. Additionally, little research had been done to link KM in banks to different topics such as innovation, customer relation management and risk management. Finally, literature provided considerable conclusion to enhance effective KM implementations in banks.
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Akram, Hassan, and Khalil ur Rahman. "Credit risk management." ISRA International Journal of Islamic Finance 10, no. 2 (December 10, 2018): 185–205. http://dx.doi.org/10.1108/ijif-09-2017-0030.
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PurposeThis study aims to examine and compare the credit risk management (CRM) scenario of Islamic banks (IBs) and conventional banks (CBs) in Pakistan, keeping in view the phenomenal growth of Islamic banking and its future implications.Design/methodology/approachA sample of five CBs and four IBs was chosen out of the whole banking industry for the study. Secondary data obtained from the banks’ annual financial reports for 13 years, starting from 2004 to 2016, were analyzed. Multiple regression, correlation and descriptive analysis were used in the examination of the data.FindingsThe results show that loan quality (LQ) has a positive and significant impact on CRM for both IBs and CBs. Asset quality (AQ), on the other hand, has a negative impact on CRM in the case of IBs, but has a significantly positive relation with CRM in the case of CBs. The impact of 16 ratios measuring LQ and AQ have also been individually checked on CRM, by making use of a regression model using a dummy variable of financial crises for robust comparison among CBs and IBs. The model proved significant, and CRM performance of IBs was observed to be better than that of CBs. Moreover, the mean average value of financial ratios used as a measuring tool for these variables shows that the CRM performance of IBs operating in Pakistan was better than that of CBs over the period of the study.Practical implicationsThe research findings are expected to facilitate bankers, investors, academics and policy makers to build a better understanding of CRM practices as adopted by CBs and IBs. The findings would be useful in formulating policy measures for the progress of the banking industry in Pakistan.Originality/valueThis research is unique in terms of its approach toward analyzing and comparing CRM performance of CBs and IBs. Such work has not been carried out before in the Pakistani banking industry.
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Makoni, Patricia Lindelwa. "From financial exclusion to financial inclusion through microfinance: the case of rural Zimbabwe." Corporate Ownership and Control 11, no. 4 (2014): 447–55. http://dx.doi.org/10.22495/cocv11i4c5p2.
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This paper sought to shed light on the status of rural banking and financial exclusion in Zimbabwe. Various reasons put forth by existing commercial banks were examined to understand why a large population of the country remains unbanked. These ranged from perceptions of the rural communities being too poor to need financial services to real economic and business decisions. Various literature on banking the poor and success stories from other countries were discussed in the literature. To meet the objectives of the study, data gathered from various individuals, commercial banks and microfinance institutions based in Matabeleland North was analysed. It was found that the rural population is in fact largely bankable. However, due to inadequate basic infrastructure in the rural areas, it did not make business sense for established banks to service that population. Banks exist to make a profit and the burden of ensuring financial inclusion of the rural population was left mainly to microfinance institutions which however faced a serious of challenges ranging.
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Chornous, Galyna, and Ganna Ursulenko. "RISK MANAGEMENT IN BANKS: NEW APPROACHES TO RISK ASSESSMENT AND INFORMATION SUPPORT." Ekonomika 92, no. 1 (January 1, 2013): 120–32. http://dx.doi.org/10.15388/ekon.2013.0.1131.
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Abstract. This study is devoted to the problems of improving the banking risk management, taking into account the new regulatory and technological requirements based on the use of modern technology and combining the latest achievements in artificial intelligence, numerical mathematics, statistics and information technology.The paper analyzes the characteristics of banking risks, the main methods of assessment used in practice. The authors propose new prospective approaches to assessment, based on the most modern methods of data analysis,identify prospective directions for banking information system improvement and suggest the possibility of their implementation.The example of Ukrainian banks shows the main problems of using new approaches to risk assessment and its information support. The article proposes the ways to overcome them.Key words: banking risk management, artificial intelligence, banking risks estimation, data analysis
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Valipour, Hashem, and Mostafa Sohouli Vahed. "Risk Management and Forecasting Macro-Variables Influences on Bank Risk." International Journal of Business and Management 12, no. 6 (May 18, 2017): 137. http://dx.doi.org/10.5539/ijbm.v12n6p137.
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Nowadays banks, as the most important component ofmoney market, are playing a very important role in country’s economy. By developing money markets, banking and financial institutes’ activities it is extensively developed and with no doubts economic development is not possible without considering the role of banking and money markets. By virtue of special and sensitive role of banks in Iran economic system, any shock, disturbances and/or ineffectiveness in economic systems directly effect on banks’ and financial institutes’ performance as well as phenomenon such as high inflation and/or price shocks and fluctuations in other markets such as currencies shall directly and indirectly effect on banks’ risk and profitability. Hence in this paper the effects of economic macro variables on capital adequacy, liquidity risk and credit risk of banks have been reviewed. The results show that there is a positive and significant relationship between gross domestic product (GDP), petroleum revenue, and exchange rate oncapital adequacy of banks. But the effects of liquidity and inflation on capital adequacy of banks are negative and significant which means it causes decreasing of capital adequacy of banks. Increasing in the variables of petroleum revenue, liquidity and inflation result in increasing of liquidity risk and vice versa the increasing in variables of GDP and exchange rate decreased the liquidity risk. Petroleum revenue, liquidity and inflation increments cause increasing in banks’ credit risk as well as GDP and exchange rate increments result in decreasing in banks’ credit risk.
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Apanga, Michelle Ayog-Nying, Kingsley Opoku Appiah, and Joseph Arthur. "Credit risk management of Ghanaian listed banks." International Journal of Law and Management 58, no. 2 (March 14, 2016): 162–78. http://dx.doi.org/10.1108/ijlma-04-2014-0033.
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Purpose – The study aims to assess credit risk management practices within financial institutions in Ghana. Specifically, the study compares credit risk management practices of listed banks in Ghana with Basel II (1999). Design/methodology/approach – The analysis is based on data gathered from varied sources, namely, use of questionnaires, analysis of internal credit policies and procedure manuals and semi-structured interviews and discussions with credit risk managers of the selected banks in May 2007 and October 2014. Findings – Overall, the credit risk management practices within listed banks in Ghana are in line with sound practices. The only dissimilarity, however, is the role of the board of directors in defining acceptable types of loans and maximum maturities for the various types of loans. The listed banks in Ghana are also exposed to credit risks associated with granting both corporate and small business commercial loans and the use of collaterals to mitigate their credit risk exposures. Practical implications – Banks in Ghana should consider developing the skills of all their personnel and appropriately motivating those involved in the credit risk management processes to ensure that they carry out this process efficiently. Originality/value – Research into credit risk management in the banking industry from the Ghanaian perspective remains scant. This study is, therefore, timely, and its findings are invaluable for the efficient management of credit risk in the banking industry. This study provides policy recommendations which will enhance shareholder value and, in this way, contribute to greater stability in the banking sector in developing countries, in particular.
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Khan, Waqas, and Muhammad Tahir. "Comparative Analysis of Risk Management Practices of Commercial Banks in Afghanistan." Jinnah Business Review 09, no. 01 (January 1, 2021): 110–22. http://dx.doi.org/10.53369/jnfv3616.
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The main objective of the study was to compare the risk management practices of public and private banks and rank different types of risks faced by public and private banks in Afghanistan banking sector. The study empirically tested the level of efficient risk management practices in the banking sector of Afghanistan. A representative sample of 110 individuals was used from both public and private banks. The analysis was based on correlation, regression analysis, and t-statistics. The findings suggest that private banks are more efficient than public banks in terms of risk assessment and analysis, risk monitoring, and credit risk management. Furthermore, RAA, RMON, and CRA are the significant determinants of RMPS. Overall, there is no significant difference in the risk management practices of public and private banks. The study found credit risk, country risk, and liquidity risks as the major risks for the banking sector in Afghanistan. Financial statement analysis, audit and physical staff, and value at risk analysis are the three top instruments respectively for the assessment of risk. This study is the first attempt to understand and analyze the risk management practices of the banking sector of Afghanistan, the results of which will assist various stakeholders of the banking industry in their decision-making process.
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Miftah Idris. "STRENGTHENING RISK MANAGEMENT OF SHARIA BANKING IN INDONESIA." Madani Legal Review 3, no. 1 (December 5, 2019): 1–11. http://dx.doi.org/10.31850/malrev.v3i1.341.
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The risk faced by sharia banking in channeling funds through financing is the biggest source of risk for business operations, because the presence of problematic financing not only lowers income for Islamic banks but also affects the health of Islamic banks. Therefore, risk management is needed to identify, measure, monitor and control risks in accordance with Islamic banking business activities. The purpose of this study is how efforts are made to improve the optimization of risk management in Islamic Banking. The research method used is descriptive legal research or literature with a type of qualitative research. The results of the study found that there is a need for optimization of institutions and systems in strengthening risk management in Islamic banking today
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Chamberlain, Trevor, Sutan Hidayat, and Abdul Rahman Khokhar. "Credit risk in Islamic banking: evidence from the GCC." Journal of Islamic Accounting and Business Research 11, no. 5 (January 11, 2020): 1055–81. http://dx.doi.org/10.1108/jiabr-09-2017-0133.
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Purpose This study aims to investigate the differences in the credit profiles of Islamic and conventional banks in the Gulf Cooperation Council (GCC) region and attempts to identify the factors responsible for those differences. Design/methodology/approach Financial data sourced from the Bankscope database for a sample of 25 Islamic and 56 conventional banks headquartered in the GCC region between 1987 and 2014 are used. The credit risk of Islamic versus conventional banks is compared using a variety of univariate (mean difference test and correlation analysis) and multivariate tests (pooled ordinary least squares (OLS) regressions with robust standard errors and year fixed effects, regressions with interaction variables and logistic regressions). Findings Pooled OLS regressions find that Islamic banks have lower credit risk than conventional banks. Robustness checks using logistic functions and interaction variables confirm this result. Using multiple econometric specifications, we also find that higher capitalization, greater liquidity and cost inefficiency contribute to the lower risk profile of Islamic banks. Research limitations/implications The study is unable to disaggregate data for banks offering both Islamic and conventional banking services and hence does not include conventional banks with Islamic windows. In addition, there are differences across countries even within the GCC region as to what is considered Sharia’h-compliant and what is not. Practical implications The results are of potential interest to not only researchers, but also market participants, regulators and legislators. The methods used in this study could be extended to other two-tiered banking systems and, in the case of Islamic and conventional banking, to other markets. Originality/value The authors use a unique sample of banks headquartered in the GCC countries, whose banking markets are similar, if not homogeneous, thus excluding operations of multinational banks. By focusing on the Gulf region, differences in the credit profiles of Islamic and conventional banks can be examined without the confounding effects of unobserved factors like culture, accounting regime or regulatory environment.
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O. Temile, Sunny, Lucky Izobo Enakirerhi, Ighosewe Enaibre Felix, and Dadang Prasetyo Jatmiko. "RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM OF NIGERIA’S BANKING SECTOR." Humanities & Social Sciences Reviews 7, no. 4 (October 6, 2019): 943–49. http://dx.doi.org/10.18510/hssr.2019.74128.
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Purpose: This study empirically observed the relationship between risk management and the internal control system of the banks in Nigeria.
Methodology: In order to achieve the main objective of this paper, we made use of data from the annual reports of fifteen commercial banks, covering a period of ten years (2007 – 2016). The study is empirical in nature and adopted a cross-sectional research design. Furthermore, the Panel Data Regression estimation technique was employed to estimate the specified model of the study.
Result: The results revealed the existence of a negative and significant relationship between credit risk and internal control. Liquidity risk which was measured using liquidity ratio has a positive and statistically significant relationship with internal control of banks in Nigeria. Based on the findings, the importance of strong and vibrant internal control policies across banks in Nigeria cannot be over-emphasized. This is because the more the internal control put in place, the greater the liquidity for banks to carry out their banking operations. On the other hand, the greater the internal control, the lesser the credit risk.
Applications: This research can be used for the universities, teachers, and students.
Novelty/Originality: Due to the recurring financial distress and eventual liquidation of some banks in Nigeria, this study is very necessary as it stresses the relevance and needs for effective internal control strategies in line with global best practices.
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Mahmood, Haroon, Christopher Gan, and Cuong Nguyen. "Maturity transformation risk factors in Islamic banking." Managerial Finance 44, no. 6 (June 11, 2018): 787–808. http://dx.doi.org/10.1108/mf-07-2017-0259.
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Purpose Maturity transformation risk is one of the leading causes of the global financial crisis. While endorsing the new Basel III liquidity reforms, the Islamic Financial Services Board has suggested a modified NSFR ratio as a structural measure for the maturity transformation function of Islamic banks, allowing for their unique balance sheet structure. The purpose of this paper is to analyze various firm-specific and macroeconomic factors that may significantly affect the maturity transformation risk of these banks. Design/methodology/approach Using an annual data set of 55 full-fledged Islamic banks from 11 different countries over a period from 2006-2015, this study utilizes a two-step system generalized method of moments estimation technique on an unbalanced panel data. Findings The empirical results reveal bank size, capital, less-risky liquid assets, risky liquid assets, external funding dependence and market power as significant bank-specific factors in determining maturity transformation risk. However, the authors find no evidence for the effect of bank credit risk on maturity transformation risk in Islamic banking system. Originality/value This is the first study that focuses on the measurement of maturity transformation risk and its determinants in Islamic banks in a cross-country context, with regards to new liquidity regulatory requirements as proposed by Islamic Financial Services Board (IFSB) in conjunction with Basel III.
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Scherbina, Tatiana, Olya Afanasieva, and Yulia Lapina. "Risk management, corporate governance and investment banking: The role of chief risk officer." Corporate Ownership and Control 10, no. 3 (2013): 313–30. http://dx.doi.org/10.22495/cocv10i3c2art5.
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This paper focuses on the defining the role of CRO in corporate governance and to show the interrelation between the way of CRO subordination and performance of investment bank. The sample consists of observations over a period of 2011 for 29 biggest investment banks (by amount of assets) implementing world-wide investment activity. The banks are originated in the USA (8), Eastern Europe (14), China (2), Japan (2), Canada (2), and Australia (1). With the aim to evaluate and compare financial performance of selected banks the construction of synthetic key performance indicator (SKPI) is worked out. The empirical analysis of risk management in the research is based on two different groups of factors, which could be used to evaluate the effectiveness of risk management in this sphere: analysis of CRO impact - Risk Management Committee factors and CRO factors, and Evaluation of Financial Performance. Results show that the CRO presence in investment banks effect positively on the financial performance.
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Noor, Siti Balqis, Rashidah Abdul Rahman, and Tariq Ismai. "Governance and Risk Management." International Journal of Finance & Banking Studies (2147-4486) 2, no. 3 (July 21, 2013): 21–33. http://dx.doi.org/10.20525/ijfbs.v2i3.152.
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The perceptions of Islamic banking professionals are surveyed through a questionnaire to explore whether the process of risk management mediates board involvement in risk management and risk management practices of Islamic banks in Malaysia and Egypt. The findings of this study identified that the Islamic banks in the selected countries are somewhat efficient in their risk management process. It was noticed that board involvement in risk management, process of risk management and risk management among Islamic banks in Malaysia are significantly higher than their counterparts in Egypt. Furthermore, high involvement of boards in risk management significantly increases the risk management process, and in turn, leads to significantly higher riskmanagement practices in Islamic banks. Hence, boards should take formal responsibility for setting, managing and periodically assessing the risk management culture of the banks. It is expected that the outcomes of this study would help policy setters in the selected countries to develop a well-structured and harmonized risk management process that enhance risk management practices, with emphasis on the effective involvements of the board of directors and Shari’ah supervisory boards in risk management practices.
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Bilginci, Mehmet Resul, Gamze Ogcu Kaya, and Ali Turkyilmaz. "Decision Support System for Credit Risk Management." International Journal of Information Systems in the Service Sector 11, no. 2 (April 2019): 18–31. http://dx.doi.org/10.4018/ijisss.2019040102.
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Risk is an integrated part of the banking functions, which cannot be eliminated completely but it can be reduced by employing appropriate techniques. Credit processing is one of the core functions in the banking system, and its performance is closely related to management of the risks. The aim of this article is to develop a credit scorecard model which can be used as decision support system. A logistic regression with stepwise selection method is used to estimate the model parameters. The data that is used to construct the credit scorecard model is obtained from one of the pioneering banks in Turkish Banking Sector. The performance of the developed model is tested using statistical metrics including Receiver Operator Characteristic (ROC) curve and Gini statistics. The result reveals that the model performs well and it can be used as a decision support system for managing the credit risk by managers of the banks.
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Jimale, Hussein Diriye, and Dr Ndede, F. W. S. F. W. S. Ndede. "CREDIT RISK MANAGEMENT AND ACCESS TO BANKING SERVICES BY ISLAMIC BANKING CUSTOMERS IN KENYA." International Journal of Finance 2, no. 6 (April 21, 2017): 75. http://dx.doi.org/10.47941/ijf.159.
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Purpose: This study sought was to assess the effect of credit risk management on access to banking services by Islamic banking customers in Kenya.Methodology: Descriptive research design was adopted. The target population for this study was 225 employees working in the head offices of the selected Islamic banks. Stratified sampling and simple random sampling were used in generating the sample. This study made use of primary data collected using structured questionnaires. The collected data was entered into the Statistical Program for Social Sciences for windows version 20 because of its ability to analyze data easily and accurately. Multiple regression analysis was used to obtain the model for the study. The study results were presented using percentages, tables and chartsResults: The study findings revealed that asset quality as measured by the non-performing loans ratio had a negative and significant effect on access to banking service by Islamic customers in Kenya. Capital adequacy, market structure and technology adoption were found to have a positive and significant effect on access to banking service by Islamic customers in Kenya. It was concluded that the level of credit risk management in Islamic banking where the level of credit risk was high was crucial for the banks in Kenya if they were to expand the level of access to Islamic banking by Islamic customers.Unique contribution to theory, practice and policy: The study recommended that banks needed to develop strategies on how to deal with credit risk by striving to keep the amount of nonperforming loans low. The study also recommended that these banks should expand their capital bases in order to strengthen their resilience and internal strength to withstand losses especially when faced by a crisis. They needed to pursue diversification across individual customers by increasing the breadth of products they coul offer to their customers. The regulators of the market needed to ensure prudent supervision so as to maintaining healthy competition in this market. It was also recommended that banks needed to promote the use of technological innovations within banking area such as internet banking, mobile banking as well as ATM banking by their customers.
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Kuzmak, Olena, Oleh Kuzmak, Anna Tarasova, and Yana Buchkovska. "Present-day realities of risk management in the activity of Ukrainian banks." Banks and Bank Systems 13, no. 1 (April 13, 2018): 150–61. http://dx.doi.org/10.21511/bbs.13(1).2018.14.
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Modern development of banking business is connected with significant risks, which, taking into account globalization processes, political, economic problems in Ukraine and worldwide, development of technological and information systems, tend to transform, therefore it is very difficult to identify them and take preventive measures concerning their smoothing. Taking the abovementioned into account, it is reasonable to assess the modern state of risk management in the activity of Ukrainian banks and the influence on banking system development. For this purpose, the authors analyzed the performance of Ukrainian banks in the period 2017–2018 based on official statistic data of the National Bank of Ukraine and measures of economic standard of banking activity; studied the modern state of performing risk management in Ukrainian banks. The authors offer the process of effective organization of risk management system in national banks, which is a prerequisite for safe management of the bank. During the study, the authors found the significant decrease in the share of credits in total assets of Ukrainian banks and low quality of assets of Ukrainian banks during 2017–2018. This is caused by the significant amount of loan arrears, during the study period, the amount of loan arrears in 2016 increased by 36 times in comparison with 2008. The authors point to the need for improvement of assessment of banks’ riskiness, as a result of which they offer to use the methods of descriptive statistics for assessing risks and identifying them at all levels of banking activity.
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Nguyen, Thao Ngoc, Chris Stewart, and Roman Matousek. "Risk management of the banking system: An emerging market survey." Risk Governance and Control: Financial Markets and Institutions 8, no. 3 (2018): 7–20. http://dx.doi.org/10.22495/rgcv8i3p1.
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The purpose of this paper is to examine risk management of the Vietnamese banking system. This is the first such study of the Vietnamese banking system. To be able to carry out a comparative analysis and provide policy recommendations for risk management, we carry out an original survey of Vietnamese commercial banks using a questionnaire. 42% of the interviewees are General/Deputy General Directors and 58% are Heads/Deputies of a risk management department. The Kruskal-Wallis, Pearson chi-square and other tests are employed to examine the relationship between risk management and bank efficiency. The survey results indicate that there is a difference between banks in terms of risk area identification, risk intensification methods prioritized, risk monitoring methods, efficiency improvement suggestions, awareness of other banks’ risk management systems and credit risk analysis.
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Sahiti, Arbana, Skender Ahmeti, and Muhamet Aliu. "Banking Activities in Kosovo and the Importance of Credit Risk Management." International Journal of Finance & Banking Studies (2147-4486) 7, no. 3 (February 25, 2019): 35–43. http://dx.doi.org/10.20525/ijfbs.v7i3.179.
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Banks between the financial services they provide play significant roles in the country's economy The importance of banks in Kosovo is one of the essential catalysts in economic growth. The banking industry based on efficiency and performance industryis the leading indicator of the country's financial stability
The pace of economic growth and long-term stability in the country varies from the level of credit and for what economic activities the bank finances. Credit risk is the primary determinant of banking performance. The higher the risk that the higher the risk is the probability of bank loss and vice versa
In this study banking activities will be discussed and events in general, as well as an analysis of the financial system especially at banks, with particular emphasis on the importance of credit risk management.
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Sheedy, Elizabeth, and Martin Lubojanski. "Risk management behaviour in banking." Managerial Finance 44, no. 7 (July 9, 2018): 902–18. http://dx.doi.org/10.1108/mf-11-2017-0465.
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Purpose Risk management is now considered the responsibility of all financial services professionals, not just senior leaders or risk specialists. Very little is known about the role of staff in risk management, so the purpose of this paper is to, first, clarify what constitutes “desirable” risk management behaviour by financial services staff based on the practitioner and regulatory literature. Based on this understanding, the authors analyse the characteristics of those who are most likely to display such behaviour. Design/methodology/approach The paper analyses some 36,000 survey responses across ten banks headquartered in Anglo countries. Findings Desirable risk management behaviour at the employee level includes compliance but goes well beyond mere compliance to include speaking up, thoughtful engagement with and accountability for the risk management framework. The authors find a significant negative association between individual risk tolerance and desirable risk management behaviour. Older workers as well as those with greater seniority are more likely to report desirable risk management behaviour. The link between female gender and risk management behaviour is not supported after controlling for individual risk attitudes. The authors provide evidence that females who succeed in financial services do not conform to traditional female stereotypes. Practical implications Findings suggest financial institutions should hire/retain more older workers and those with lower risk tolerance to improve risk management. Hiring more females, however, is not likely to lead to better risk management. Originality/value The paper is the first to investigate risk management behaviour in financial services staff. The research exploits a unique, difficult to obtain data set.
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Yoseph Y. F., Deograsias. "Analisis Manajemen Risiko Pada Perusahaan Perbankan Yang Go Public." BIP's : JURNAL BISNIS PERSPEKTIF 10, no. 2 (November 12, 2019): 161–74. http://dx.doi.org/10.37477/bip.v10i2.40.
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The expanding banking growth is followed by the increasing number of risks that must be faced by banks. Along with the external conditions of the banking sector which were increasingly troubled by the threatening risks, Bank Indonesia required each bank to have an integrated risk management system. To minimize this risk, Basel II is applied to improve the standards for banks that go public in order to manage risk management properly. As a financial intermediary, the implementation of risk management is very important for banks to reduce losses. Maximum risk management for banks can ensure banks will survive destruction if a bad situation occurs. With the increasingly complex risks in the banking industry, Good Corporate Governance practices are needed. These efforts are carried out to avoid a banking crisis in the future.
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Yoseph Y.F., Deograsias. "Analisis Manajemen Risiko Pada Perusahaan Perbankan Yang Go Public." BIP's JURNAL BISNIS PERSPEKTIF 10, no. 2 (July 31, 2018): 161–74. http://dx.doi.org/10.37477/bip.v10i2.60.
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The expanding banking growth is followed by the increasing number of risks that
must be faced by banks. Along with the external conditions of the banking sector which were increasingly troubled by the threatening risks, Bank Indonesia required each bank to have an integrated risk management system. To minimize this risk, Basel II is applied to improve the standards for banks that go public in order to manage risk management properly. As a financial intermediary, the implementation of risk management is very important for banks to reduce losses. Maximum risk management for banks can ensure banks will survive destruction if a bad situation occurs. With the increasingly complex risks in the banking industry, Good Corporate Governance practices are needed. These efforts are carried out to avoid a banking crisis in the future.
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Nieto, Maria J. "Banks, climate risk and financial stability." Journal of Financial Regulation and Compliance 27, no. 2 (May 13, 2019): 243–62. http://dx.doi.org/10.1108/jfrc-03-2018-0043.
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Purpose This paper aims to quantify the (syndicated) loan exposure to elevated environmental risk sectors of the banking system in the USA, EU, China, Japan and Switzerland at US$1.6tn and to highlight its importance, which ranges from 3.8 (USA) to 0.5 per cent (China) in terms of total national banking assets. The paper highlights the relevance of exploring prudential policy responses, including a harmonized taxonomy, statistical and reporting framework that could contribute to internalizing the negative externalities associated with climate risks by both banks and their supervisors. Among the prudential supervisory tools, credit registers facilitate the assessment of environmental risk drivers in “carbon stress tests.” This paper also presents a framework of analysis for the regulatory treatment of climate-related risks. Design/methodology/approach Similarly to Weyzig et al. (2014), this paper uses financial databases on the banks’ role as book runners for syndicated loans; that is, as the lead arrangers who also provide a large share of the actual lending. Loans are outstanding on December 31, 2014, and the paper assumes linear amortization of loans issued before that date and with maturity after that date. This study includes the largest banks from the above-mentioned countries with financial information available in SNL Financial and EU banks with financial information available in the ECB database on December 31, 2014. By assessing the relative share of the ten largest (or total reporting if less) banks’ exposure to each high environmental risk sector in relation to their total assets, these findings can be extrapolated across sectors in the respective country. Findings This paper quantifies the loan exposure to elevated environmental risk sectors of the banking system in the USA, EU, China, Japan and Switzerland in US$1.6tn, broadly in line with the findings of Battiston et al. (2017) and Weyzig et al. (2014). This paper also explores prudential policy approaches and tools. In addition to the lack of taxonomy of “brown” vs “green,” the paper identifies the limitations to assess the risks involved in the transition to a low-carbon economy: supervisory reports that do not make full use of the existing international statistical framework (e.g. EU COREP and FINREP); lack of harmonized reporting requirements of environmental risks; lack of credit registers as tools to perform carbon stress-testing; and supervisors’ governance framework that do not internalize environmental risks (e.g. proposed revision of the Basel Core Principles of Banking Supervision). As per the stress-testing, the paper presents two examples. The paper presents a framework of analysis for the regulatory treatment of climate-related risks. The author identifies two critical elements of such framework if prudential regulation of environmental risks is to be considered: the consideration or not of climate risk as credit risk and the impact of environmental risks over probabilities of default over the entire business cycle. Research limitations/implications No internationally accepted “official” taxonomy of high environmental risk sectors exists. This paper uses Moody’s (2015a) classification of sectors according to their environmental risk exposure. This paper’s exposures do not reflect the real risk exposure of these institutions and the banking industry as a whole because, as explained in Page 6, these values are without regard to bilateral loans and guarantees and securitizations of loans; in the case of loans to power generation companies, renewable sources are not excluding and, similarly, for the production of electric vehicles, loans are not excluded. Furthermore, this paper does not assess banks’ exposures to sovereigns subject to high environmental risks and bonds and equity issued by corporations operating in high environmental risk sectors. Practical implications Contribution to the present policy debate on how to regulate banks’ exposure to high environmental risk and how to manage the transition to a low-carbon economy. Social implications This paper can increase awareness of the banking sector transition risks to a low-carbon economy. Originality/value This paper quantifies banks direct exposures to high environmental risk sectors using an ample definition of sectors exposed to environmental risk. The author suggests policy actions to assess the environmental risks. The author defines a regulatory framework for banks to internalize the negative externalities of environmental risks.
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Elgharbawy, Adel. "Risk and risk management practices." Journal of Islamic Accounting and Business Research 11, no. 8 (January 13, 2020): 1555–81. http://dx.doi.org/10.1108/jiabr-06-2018-0080.
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Purpose This study aims to compare types and levels of risk and risk management practices (RMPs) including the recognition, identification, assessment, analysis, monitoring and control of risk in both Islamic and conventional banks. Design/methodology/approach A questionnaire survey was conducted among the Islamic and conventional banks in Qatar, together with an analysis of archival data extracted from the Thomson Reuters Eikon database for the period 2009-2018. Data were analysed using descriptive statistics, ANOVA and regression analysis. Findings Islamic banks encounter unique types and levels of risk that are not encountered by conventional banks. In Islamic banks, risks such as those of operation and Sharia non-compliance are perceived to be higher, while in conventional banks other risks such as those of credit and insolvency are higher; other risks, for example, liquidity risk, are faced by both. RMPs are determined by understanding risk and risk management, risk identification, risk monitoring and control and credit risk analysis, but not by risk assessment and analysis. However, the RMPs of the two types of bank are not significantly different, except in the analysis of credit risk. Research limitations/implications The study contributes to the debate in the literature by developing a better understanding of the dynamism of risk management in Qatari banks, which can be extended to similar contexts in the region. However, the relatively small sample size in only one country limits the possibility of generalizing the findings. The survey methodology is based on the perception of bankers rather than their actual actions and does not provide in-depth analysis for each type of risk, especially credit risk. However, using archival data, in addition to those from the survey, minimises the bias that would result from depending on one source of data. Practical implications The study provides valuable insights into the different types and levels of risk, as well as the RMPs in Islamic and conventional banks, which can help in guiding the future development and regulation of risk management in the banking sector of Qatar and its region. Originality/value The study helps to explain the mixed results of previous studies that compare types and levels of risk and RMPs in Islamic and conventional banks. Using different types of data and analysis, it provides evidence from one of the fastest growing economies in the world. It also addresses the concerns over RMPs in banks since the global financial crisis.
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Kumar Basu, Udayan. "Risk Management and Capital Adequacy Norms for Banks." Foreign Trade Review 40, no. 3 (October 2005): 29–44. http://dx.doi.org/10.1177/0015732515050302.
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The overall banking scenario has undergone a dramatic change in the wake of liberalization of markets and advent of the concept of universal banking. Commercial banks can now operate as veritable financial supermarkets offering all kinds of services under one roof. The various regulatory requirements and the presence of NPAs in banks' balance sheets introduce certain rigidities in their operating parameters. Besides, the investment options expose them to market and project risks, and brings the issue of financial fragility to the foreground. In view of the new kinds of risk affecting banks and increasing global competition faced by them, their capitalization and the efficacy of the regulatory and supervisory norms assume a greater significance. The current article explores the impact of possible changes in CRR and SLR on a bank's cut-off risk, i.e. the maximum permissible risk without any default, as well as its dependence on interest rate and capital adequacy ratio. Basel II norms for taking market risk into account, the use of Value at Risk as its measure and the recent guideline by Reserve Bank of India to relate the overall market exposure to net worth, have been examined. A method towards selection of an appropriate capital adequacy ratio to cover market risks has also been proposed.
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AlKhouri, Ritab, and Houda Arouri. "The effect of diversification on risk and return in banking sector." International Journal of Managerial Finance 15, no. 1 (February 4, 2019): 100–128. http://dx.doi.org/10.1108/ijmf-01-2018-0024.
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PurposeThe purpose of this paper is to investigate the effect of revenue diversification, non-interest income and asset diversification on the performance and stability of the Gulf Cooperation Council (GCC) conventional and Islamic banking systems.Design/methodology/approachThe authors implement a panel of 69 conventional and Islamic banks listed in six GCC markets over the period of 2003–2015, using the System Generalized Method of Moments methodology.FindingsNon-interest income diversification has a negative impact on GCC banks’ performance, while asset-based diversification affects banks performance positively. However, Investors tend to penalize the value of the banks’ assets, which are highly diversified. Government intervention, lack of competition, legal protection and high control of Central banks on GCC banks’ have positive impact on performance. Contrary to the results on conventional banks, asset diversification adds value to Islamic banks. Overall, both banks’ revenue and non-interest diversification have negative impact on GCC banks’ stability, while asset diversification improves Islamic banks’ stability.Research limitations/implicationsThe analysis is limited to a sample of banks, which are listed in the GCC stock exchanges. The lack of data on private and foreign banks operating in the region made the analysis and, consequently, the results specific to shareholding companies. Also, the authors’ measures of bank stability might not be appropriate to use for Islamic banks, given their banking models implemented.Practical implicationsResearch results provide important implications for regulators, bank managers and policy makers, as to the expected ways to support economic diversification through bank diversification strategies.Originality/valueUnlike related studies, the authors’ sample of homogeneous banks has a market structure that is different from the samples in the literature covering either developed countries or heterogeneous samples from both developed and developing countries. Furthermore, using an efficient econometric methodology, the authors deal with two types of banks: conventional banks and Islamic banks. The research determines which type of bank is more able to benefit from different types of diversification. Unlike previous research, this research explores the sensitivity of the results both to the regulatory environment of the GCC market and to general market conditions.
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Nguyen, Thanh Pham Thien, and Son Hong Nghiem. "The interrelationships among default risk, capital ratio and efficiency." Managerial Finance 41, no. 5 (May 11, 2015): 507–25. http://dx.doi.org/10.1108/mf-12-2013-0354.
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Purpose – The purpose of this paper is to examine the interrelationships among default risk, capital and efficiency of the Indian banking system over 1990-2011. This study also took into account the impact of ownership on these interrelationships Design/methodology/approach – This paper employed Data Envelopment Analysis (DEA) Windows Analysis to estimate efficiency levels and trends of individual banks. This paper then used a model of seemingly unrelated regression equations (SURE) to examine the interrelationships among default risk, capital and efficiency. Findings – This study found a two-way negative association between efficiency and default risk, and between capital ratio and default risk. However, this study found a two-way positive relationship between capital ratio and only profit efficiency. Public banks behaved differently from private banks regarding the association between capital and efficiency. Moreover, public banks had greater probability of default risk, lower capital ratio but higher efficiency level than private banks. Further, default risk, capital ratio and efficiency of the Indian banking system increased over time, but the two formers were driven by public banks while the latter was driven by private banks. Practical implications – The findings of this study appear to favour capital ratio as an efficient tool to improve efficiency and reduce default risk of the Indian banking system. Originality/value – This paper is the first investigating the interrelationships between bank risk, capital and efficiency of the Indian banking system, where bank risk is measured by Z-score value and efficiency is captured by cost, revenue and profit efficiencies, and then considering the impact of agency issues on these interrelationships.
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Solonina, S. V., and A. A. Labov. "Risk management in a commercial bank." Scientific bulletin of the Southern Institute of Management, no. 2 (June 25, 2020): 75–82. http://dx.doi.org/10.31775/2305-3100-2020-2-75-82.
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The study presents the problems of risk management of a commercial Bank as the most important element in the overall banking management system. The relevance of the study is due to the current economic and political situation in the country, as well as the instability of market conditions, which significantly complicated the risk management system in commercial banks, which contributed to the deterioration of their financial condition. The processes taking place in the global financial market in recent years have a significant impact on the banking system, significantly increasing Bank risks and reducing the financial stability of credit institutions. Differences are highlighted that reflect the priority aspects in assessing the risk management of a commercial Bank from the authors ‘ point of view. Risk management strategies in credit institutions are considered. A comparative analysis of the methodologies used to assess the risks and capital adequacy of commercial banks in Russia and abroad has been carried out, and features of their use have been identified.
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Ilhusady, Iman Kassem, and Yavuz Demirel. "The role of employees’ empowerment on risk management." International Journal of Research in Business and Social Science (2147- 4478) 9, no. 4 (July 3, 2020): 51–65. http://dx.doi.org/10.20525/ijrbs.v9i4.709.
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The Libyan economy under the influence of current political risks that is resulted in a sudden halt in petroleum products following the revolution followed by a halt in major economic activities. The banking sector was not immune to these current economic risks therefore, the banking sector faced non-financial and financial risks. Our study focuses on human resources with a high level of talent and skills and their role to overcome the banking risks faced by the Libyan banking sector. This is of great importance as the first study addressing the empowerment of human resources in effective risk management in the banking sector, especially in Libya. To a chive the objective of the study the questionnaire method was used to collect data, the survey was distributed to 320 employees and six banks operating in the eastern part of Libya were selected as targets to investigate the risks faced by the banking system as a result of the current political crisis. The result of the research demonstrated there is a positive and statistically significant relationship between the dimensions of employees’ empowerment and effective risk management. It was seen that issues such as training, incentives, and participation, sharing of authority, teamwork for employees are important in risk management. In addition, the risk management and strengthening of human resources among the banks in Benghazi and Al Bayda have been found to differ in their dimensions. The findings in this study seem to be consistent with many findings in the literature.
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Abdo, Mai M., and Ibrahim A. Onour. "Liquidity Risk Management in Full-Fledged Islamic Banking System." Management and Economics Research Journal 6 (2020): 1. http://dx.doi.org/10.18639/merj.2020.990012.
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This study aims to assess the determinants of liquidity risk in the full-fledged Islamic banking system of Sudan, using panel data regression. The dependent variable in this research is the liquidity risk, which is determined as the extreme excess or extreme shortage of liquidity in each bank, based on the VaR approach, and the independent variables are bank size, investment, profit, and the budget deficit during the period 2012-2016. The authors’ findings indicate the bankspecific variables such as the size, investment, and profit are statistically significant, whereas the budget deficit variable is negatively associated with liquidity risk but is insignificant. The insignificance of the budget deficit variable is an indication of the government reliance on its deficit financing on debt financing, i.e., excessive money creation, as contrary to equity financing. Also indicated in the paper is that the investment variable has a positive and significant effect on liquidity risk, indicating that Islamic banks’ investment portfolios are dominated by short-term securities (sikook). This result supports the findings in the literature that investment portfolios in Islamic banks are likely to be dominated by short-term investment securities as a result of the absence of risk-hedging tools in the Islamic banking system, in general. The finding in the paper also indicates a positive and significant sign of profit coefficient with liquidity risk, which is similar to the positive association between higher risk and higher earnings relationships portrayed in the literature of corporate finance. The effect of the size indicator on liquidity risk reveals a positive and significant association, implying that larger banks are more likely to face liquidity risks of shortage as well as excess liquidity.
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Claassen, Stephan, and J. H. Van Rooyen. "Bank liquidity risk management: A South African survey to determine future change." Risk Governance and Control: Financial Markets and Institutions 2, no. 3 (2012): 33–53. http://dx.doi.org/10.22495/rgcv2i3art3.
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In 2008 the global financial system and, more particularly, the world banking system suffered a financial crisis worse than any earlier crises. The financial crunch brought to light that liquidity risk management in banks poses a problem, and that the world’s financial institutions will have to change their current practices as it relates to this risk. Apart from the importance of liquidity and the risk that it may cause, the integrated nature of all risks made banks more aware of the fact that none of these risks can be managed in isolation. For various reasons, South African banks were not as exposed to the problems experienced in the global context. However, SA banks may have learned new lessons from the crisis and may plan to change the way they manage liquidity risk in particular, in the future. In order to determine how SA banks perceive liquidity management and liquidity risk, a survey of all SA banks was carried out. The majority of respondents indicated that the financial crisis reminded them of the importance of liquidity risk management in the South African banking system as well as the global banking system. The majority of banks rate all the liquidity risk management tools as extremely important and rate corporate governance, strategy, policy and risk tolerance, liquidity risk measurement and intra-day liquidity as their number one priority. Basel III is generally perceived as being effective, but 30% of respondents perceived it as neither effective nor ineffective, because South African banks already have similar measures in place.
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Chahine, Salim, and Bassem Dagher. "Risk management and corporate governance in the Lebanese Islamic banking industry." Corporate Ownership and Control 5, no. 4 (2008): 345–55. http://dx.doi.org/10.22495/cocv5i4c3p2.
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Despite recent growth in the Islamic banking industry, little is known on the best practices in its risk management. This paper examines the risk management systems of Islamic banks in Lebanon. Using a survey technique, it shows the diversity of risks faced by Islamic banks. It also confirms the importance of good corporate governance as a tool which is associated with the implementation of best practices in risk management
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Carretta, Alessandro, Vincenzo Farina, and Paola Schwizer. "Risk culture and banking supervision." Journal of Financial Regulation and Compliance 25, no. 2 (May 8, 2017): 209–26. http://dx.doi.org/10.1108/jfrc-03-2016-0019.
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Purpose This paper aims to analyzing the main risk culture traits of a sample of Central Banks and Supervisory Authorities in Europe as well as of the European Central Bank (ECB). Design/methodology/approach Risk culture is measured through text data processing of the official discourses made by the head Supervisory Authorities, during the years from 1999 to 2012. Findings Results highlight heterogeneous but converging risk cultures for European Union (EU) supervisors and the presence of a “distance” between these cultures and the risk culture of the ECB. Originality/value The paper points out that cultural differences, especially in presence of credit markets still characterized by poor integration, could create unwanted distortion effects during the initial stages of the Banking Union.
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Adamowicz, Tomasz. "Types of Risk in Banking Operations – Categorization and Definitions." Economic and Regional Studies / Studia Ekonomiczne i Regionalne 11, no. 4 (December 1, 2018): 37–56. http://dx.doi.org/10.2478/ers-2018-0034.
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Summary Subject and purpose of work: The article deals with the issue of risk mainly in banking activity. Different definitions of risk were reviewed as tools for risk management in banks and for regulatory activities by institutions. Materials and methods: The research material was taken from the subject literature and official documents of financial market institutions - international organizations, as well as foreign and domestic financial institutions. They were mainly legal acts, standards and guidelines/recommendations. Particular attention was paid to documents published by banking supervision authorities. Results: As a result of the study, the multiplicity of concepts and approaches were found to define and identify banking risks as the categorizations presented by regulators seemed to be a standard to apply in risk management practices. Conclusions: Among the risk categorization used by banks, the leading ones have been presented by supervisory authorities. Defining the types of risk in operations should be the first stage of the internal risk management process which is necessary for banks’ survival. Ensuring high quality of the implementation of the first stage determines the efficiency and effectiveness of the entire process. The decisive requirements set by European and national regulators with regard to banks’ application of risk categorization as part of the risk management system contributed to mitigating the phenomena related to the global financial crisis among banks in Europe.
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Pambekti, Galuh Tri. "Credit Risk Management in Financial Institution: Comparative Study in Islamic and Conventional Banking." EkBis: Jurnal Ekonomi dan Bisnis 3, no. 1 (July 20, 2020): 261. http://dx.doi.org/10.14421/ekbis.2019.3.1.1185.
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Credit and financing problems at conventional banks and Islamic banks are related to how businesses that have been financed by banks can be run, whether the loan recipient has actually run the business as stated in the contract or the business manager has been denied. The purpose of this study was to determine the differences in Non-Performing Loans in conventional banks and Non-Performing Financing of Islamic banks. Hypothesis testing techniques in this study used the first two choices of independent sample t-test if the data were normally distributed so the classical assumptions were tested first to ensure that the data used by researchers had a normal distribution and if the data were not normally distributed will use the Mann Whitney test to test the difference between Non Performing Loans and Non Performing Financing in Islamic commercial banks and conventional banks.. So the results of this study indicate that there are differences between PT. Bank Mandiri and NPF of PT Bank Syariah Mandiri, or it can be said there is a difference between ratios that indicate the ability of bank management in managing loans or financing problems provided by PT. Bank Mandiri and PT Bank Syariah Mandiri.
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Chan, Sok-Gee, Eric H. Y. Koh, and Mohd Zaini Abd Karim. "The Chinese banks’ directors and their risk-taking behavior." Chinese Management Studies 10, no. 2 (June 6, 2016): 291–311. http://dx.doi.org/10.1108/cms-10-2015-0226.
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Purpose The purpose of this paper is to examine the impact of the directors’ socioeconomic backgrounds on the risk-taking behavior of the listed commercial banks in China. Design/methodology/approach The generalized least square method and Arellano and Bover’s (1995) generalized method of moment were used to study the relationship between the directors’ socioeconomic backgrounds and bank risk-taking behavior. The sample studied consists of 16 listed commercial banks in China from 2003 to 2011. Findings It was found that smaller board sizes and higher percentage of independent directors contribute to lower risk-taking. The results also indicate that banks are better off with boards that have gender diversity, government affiliation and higher average age because they enhance problem-solving and market insights facilitate adherence to government or regulatory policies and help reduce the banks’ risks. Research limitations/implications Future studies may consider including non-public-listed banks, pre-2003 data and analyses of the agencies to which the government-affiliated directors are or were attached. Practical implications The paper suggests that corporate governance reform initiatives with closely monitored implementation and phased liberalization contributed toward the banking industry’s resilience. Implications for management include that boards of directors with better quality, sufficient independence, gender diversity, government affiliation and maturity will help reduce risks. Social implications This study may facilitate the decision-making for the bank management and policymakers on the selection of best directors in the Chinese banking sector. The Chinese banking system serves as a plausible role model for consideration, given that four of its banks have now leapfrogged to be among the top ten largest banking institutions after the global financial crisis. Originality/value The study covers a wide range of socioeconomic backgrounds of the board of directors which are crucial in influencing the behavior of the board in banking operations.